What Is a Y-Share?
Y-shares are a institutional share class offered in open-end mutual funds. Targeting institutional investors, the share class frequently has a high least investment, beginning at approximately $25,000. This share class also offers the benefit of waived or limited load charges and lower comparative total annual fees.
How Y-Shares Work
Y-shares are an alternative to I-shares which are in the most commonly offered mutual fund share class for institutional investors. Y-shares have features and characteristics that are tailored to institutions.
High least investments are one of the most distinguishable characteristics of Y-shares and other institutional shares classes. Least investments typically begin at $25,000 and can be as high as $5 million. Sales loads are usually not required for Y-shares, which allows institutional investors to buy and sell shares with no added commission charges.
Since Y-shares are not associated with intermediary sales charges, they also usually pay no distribution fees or 12b-1 fees from the fund's expenses. Without 12b-1 fees, the total expense ratios are lower overall than other share classes in the fund, which is another benefit for institutional investors.
While Y-shares are typically held for institutional investors, they may allow investment from retirement plan investors now and again. Most mutual funds will have designated retirement share classes with similar benefits to institutional shares.
Funds without retirement share classes may allow pooled fund investments in Y-shares from retirement plans that collectively look for investment in the fund. This can give a significant benefit to retirement shareholders, who might take part in the savings from the share class' lower fees.
Example of Y-Shares
Putnam Investments is one investment manager that offers Y-shares across many of its funds as the primary share class for institutional investors. The Putnam Global Equity Fund gives one example. The Fund offers A-shares, B-shares, C-shares, M-shares, R-shares, R6-shares, T-shares, and Y-shares.
The Putnam Global Equity Fund's Y-share class charges no front-end or back-end sales commissions. The share class also charges no 12b-1 fees, which assists it with having one of the least annual expense ratios in the Fund at 0.90%. This compares to total annual fund operating expenses of 1.9% for the B-shares and C-shares.
Performance for the Y-shares as of March 30, 2020, was also one of the highest in the Fund throughout the previous five years at 5.81%.
- These shares offer a limited or waived load charge or lower comparative total annual fee.
- Y-shares are not associated with intermediary sales charges and usually pay no distribution fees or 12b-1 fees from the fund's expenses, allowing their expense ratios to be lower overall than other share classes.
- Funds without retirement share classes may allow pooled fund investments in Y-shares from retirement plans that collectively look for investment in the fund.
- While Y-shares are typically saved for institutional investors, they may allow investment from retirement plan investors at times.
- A Y-share is an institutional share class offered in open-end mutual funds — having a high least investment — generally $25,000 or more.